Text: SF02421 Text: SF02423 Text: SF02400 - SF02499 Text: SF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN 1 1 Section 1. NEW SECTION. 15E.41 PURPOSE. 1 2 The purpose of this division is to enhance the quality of 1 3 life for citizens of this state by encouraging the creation of 1 4 new jobs, industry, products, and wealth through the increased 1 5 availability and accessibility to capital, particularly at the 1 6 seed and venture capital investment stages. 1 7 Sec. 2. NEW SECTION. 15E.42 TAX CREDITS. 1 8 1. For tax years beginning on or after January 1, 2000, a 1 9 tax credit shall be allowed against the taxes imposed in 1 10 chapter 422, divisions II, III, and V, and in chapter 432, for 1 11 net losses, as described in section 15E.43, subsection 2, 1 12 incurred by a taxpayer in an equity investment approved 1 13 pursuant to section 15E.43. An individual may claim the 1 14 credit of a partnership, limited liability company, S 1 15 corporation, estate or trust electing to have income taxed 1 16 directly to the individual. The amount claimed by the 1 17 individual shall be based upon the pro rata share of the 1 18 individual's earnings from the partnership, limited liability 1 19 company, S corporation, estate or trust. Any tax credit in 1 20 excess of the taxpayer's liability for the tax year may be 1 21 credited to the tax liability for the following three years or 1 22 until depleted, whichever is earlier. A tax credit shall not 1 23 be carried back to a tax year prior to the tax year in which 1 24 the taxpayer redeems the tax credit. 1 25 2. The maximum tax credit for a qualifying taxpayer shall 1 26 not exceed fifty percent of the taxpayer's original equity 1 27 investment in an approved investment or one hundred thousand 1 28 dollars, whichever is less. 1 29 3. The aggregate amount of tax credits issued under this 1 30 section for taxes imposed pursuant to chapter 422, divisions 1 31 II, III, and V, and chapter 432 shall not exceed a total of 1 32 thirty-five million dollars. 1 33 4. The department of revenue and finance, in consultation 1 34 with the department of economic development, shall develop a 1 35 system for registration, authorization, and redemption of tax 2 1 credits issued by the state under this section. The 2 2 department of revenue and finance and the department of 2 3 economic development shall adopt any other policies, 2 4 procedures, or rules pursuant to chapter 17A necessary for the 2 5 administration of this division and of tax credits issued by 2 6 the state under this section. 2 7 Sec. 3. NEW SECTION. 15E.43 APPROVED INVESTMENTS. 2 8 1. In order for an investment to qualify for a tax credit 2 9 under section 15E.42, the investment must be approved by the 2 10 department of economic development and be in a qualifying 2 11 business. In order to be a qualifying business, the business 2 12 must meet all of the following criteria: 2 13 a. The business is located in this state. 2 14 b. The business has been in operation for five years or 2 15 less. 2 16 c. The business has a business plan which details the 2 17 business's growth strategy, the management team if applicable, 2 18 a production or management plan, a financial plan, and other 2 19 standard elements of a business plan. 2 20 d. The business has an owner who is currently 2 21 participating in, or has successfully completed, a recognized 2 22 entrepreneurial venture development curriculum or have an 2 23 owner with a minimum of three years of management experience. 2 24 e. The business is not a business engaged primarily in 2 25 retail sales, the provision of health care or other 2 26 professional services, or the distribution of products or 2 27 services. 2 28 2. a. A tax credit authorized under section 15E.42 may be 2 29 redeemed for losses of the taxpayer's original equity 2 30 investment realized upon either of the following, whichever 2 31 occurs first: 2 32 (1) Upon the insolvency of the business. 2 33 (2) Upon transfer of ownership of substantially all of the 2 34 qualifying business after a minimum of three years from the 2 35 date of the qualifying equity investment that, at the time of 3 1 the transfer, would demonstrate a documented loss in the value 3 2 of the original equity investment. 3 3 b. The tax credit shall not be redeemed later than ten 3 4 years from the date of the qualifying investment. 3 5 Sec. 4. NEW SECTION. 15E.44 REPORTS AND RESERVES. 3 6 1. By December 15 of each year, the department of economic 3 7 development, in consultation with the department of revenue 3 8 and finance, shall submit a report to the governor and the 3 9 general assembly. The report shall include, but not be 3 10 limited to, the anticipated value of any tax credits issued 3 11 and the estimated current and anticipated impact the approved 3 12 investments have on the state. 3 13 2. The department of economic development shall conduct an 3 14 annual risk analysis which matches the current and anticipated 3 15 value of approved equity investments with the current and 3 16 anticipated value of any tax credits issued. If the 3 17 anticipated value of the tax credits authorized exceeds the 3 18 anticipated value of approved investments, the department of 3 19 economic development shall establish a reserve account within 3 20 the repayment stream of an Iowa agricultural industry finance 3 21 loan made pursuant to section 15E.208 sufficient to cover such 3 22 losses to the general fund of the state in the event that tax 3 23 credits are redeemed. 3 24 Sec. 5. NEW SECTION. 422.11C APPROVED INVESTMENT TAX 3 25 CREDIT. 3 26 The taxes imposed under this division, less the credits 3 27 allowed under sections 422.12 and 422.12B, shall be reduced by 3 28 an approved investment tax credit authorized pursuant to 3 29 sections 15E.41 through 15E.44. 3 30 An individual may claim the approved investment tax credit 3 31 allowed a partnership, limited liability company, S 3 32 corporation, or estate or trust electing to have the income 3 33 taxed directly to the individual. The amount claimed by the 3 34 individual shall be based upon the pro rata share of the 3 35 individual's earnings of the partnership, limited liability 4 1 company, S corporation, or estate or trust. 4 2 Any credit in excess of the tax liability for the tax year 4 3 may be credited to the tax liability for the following three 4 4 years or until depleted, whichever is earlier. 4 5 Sec. 6. Section 422.33, Code Supplement 1999, is amended 4 6 by adding the following new subsection: 4 7 NEW SUBSECTION. 9. The taxes imposed under this division 4 8 shall be reduced by an approved investment tax credit 4 9 authorized pursuant to sections 15E.41 through 15E.44. 4 10 Any credit in excess of the tax liability for the tax year 4 11 may be credited to the tax liability for the following three 4 12 tax years or until depleted, whichever is earlier. 4 13 Sec. 7. Section 422.60, Code 1999, is amended by adding 4 14 the following new subsection: 4 15 NEW SUBSECTION. 4. The taxes imposed under this division 4 16 shall be reduced by an approved investment tax credit 4 17 authorized pursuant to sections 15E.41 through 15E.44. 4 18 Any credit in excess of the tax liability for the tax year 4 19 may be credited to the tax liability for the following three 4 20 tax years or until depleted, whichever is earlier. 4 21 Sec. 8. NEW SECTION. 432.12A APPROVED INVESTMENT TAX 4 22 CREDIT. 4 23 The taxes imposed under this chapter shall be reduced by an 4 24 approved investment tax credit authorized pursuant to sections 4 25 15E.41 through 15E.44. 4 26 Any credit in excess of the tax liability for the calendar 4 27 year may be credited to the tax liability for the following 4 28 three calendar years or until depleted, whichever is earlier. 4 29 EXPLANATION 4 30 This bill creates a personal income, corporate income, 4 31 financial institution franchise, and insurance premium tax 4 32 credit which may be claimed by a taxpayer for net losses 4 33 incurred by the taxpayer in an approved equity investment. 4 34 The bill provides that any tax credit in excess of the 4 35 taxpayer's liability may be credited to the tax liability for 5 1 the following three years or until depleted, whichever is 5 2 earlier. The bill provides that the tax credit shall not be 5 3 carried back to previous tax years. The bill provides that 5 4 the maximum tax credit for a qualifying taxpayer shall not 5 5 exceed 50 percent of the taxpayer's original equity investment 5 6 in an approved investment or $100,000, whichever is less. The 5 7 bill provides that the aggregate amount of tax credits issued 5 8 by the state shall not exceed a total of $35 million. 5 9 The bill provides that in order for an investment to 5 10 qualify for a tax credit, the investment must be approved by 5 11 the department of economic development and be in a qualifying 5 12 business which meets certain criteria. The bill provides that 5 13 a tax credit may be redeemed for losses of the taxpayer's 5 14 original equity investment incurred upon the insolvency of the 5 15 business or upon the transfer of ownership of substantially 5 16 all of the qualifying business after a minimum of three years 5 17 from the date of the qualifying equity investment. The bill 5 18 provides that the tax credit shall not be redeemed later than 5 19 10 years from the date of the qualifying investment. 5 20 The bill provides that, by December 15 of each year, the 5 21 department of economic development, in consultation with the 5 22 department of revenue and finance, shall submit a report to 5 23 the governor and the general assembly relating to the 5 24 anticipated value of any tax credits issued and the estimated 5 25 current and anticipated impact the approved investments have 5 26 on the state. The bill provides that the department of 5 27 economic development shall conduct an annual risk analysis 5 28 which matches the current and anticipated value of approved 5 29 equity investments with the current and anticipated value of 5 30 any tax credits issued. The bill provides that if the 5 31 anticipated value of the tax credits authorized exceeds the 5 32 anticipated value of qualifying equity investments, the 5 33 department of economic development shall establish a reserve 5 34 account within the repayment stream of an Iowa agricultural 5 35 industry finance loan made pursuant to Code section 15E.208 6 1 sufficient to cover such losses to the general fund of the 6 2 state in the event that tax credits are redeemed. 6 3 LSB 5498XS 78 6 4 tm/as/5
Text: SF02421 Text: SF02423 Text: SF02400 - SF02499 Text: SF Index Bills and Amendments: General Index Bill History: General Index
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